The Greek Government Is Fighting Against Planned Financial Ruin

The Finance Minister, Yanis Varoufakis, would rather give insufficient funds to the IMF than cut wages.

Finding itself short of cash, the Greek Government may not be able to pay the IMF in full at its next repayment deadline. Meanwhile, the creditors are still demanding that Tsipras turn his back on his election promises.

Suffocate Greece until it gives in. After four months of negotiation and delaying repayments, the creditors of Athens are tightening their grip, hoping to pressure the left wing President into breaking his campaign promises. But rather than giving in to the orders of wage cuts, a reform sanctioning the instability of the job market and cuts to the pension system suggested by the European Commission, the IMF and the European Central Bank (ECB), the Greek Government may fail to repay the IMF in full at the next deadline. Greece must repay € 1.5 billion in total, with four deadlines between the 5th and 19th of June. Athens has until October to pay back nearly €10 billion to its creditors, principally the ECB (€ 6.7 billion). At the end of April, the government, being short on cash, requisitioned the treasury reserves of public entities in order to pay pensions and civil servant wages. As the bank accounts have been emptied, the government may choose not to pay at the next deadline, an unprecedented event in the Eurozone. On Monday, the Finance Minister, Yanis Varoufakis, stated very clearly that he would prefer to “underpay the IMF than cut wages” as, in his eyes, wages and pensions are an “absolute priority”. Yesterday, a spokesperson for Syriza, Nikos Filis, suggested the possibility of an underpayment in a televised speech “From this moment until the 5th of June, we are in a crucial period” he insisted, “If no agreement is made to solve the current financial problems, there will be no money”.

Stalling tactics are being used on the creditors

While the Greek negotiators are optimistic, the creditors speak with a crusty tone, making the final repayment of €7.2 billion contingent on anti-grass-root reforms. Jeroen Dijssselblowm, the President of the Eurogroup tried to buy some time: “We are making progress, I would say cautiously”. On Monday, the Greek newspaper To Vima suggested the existence of a temporary “Juncker Plan” with less strict conditions that would speed up the negotiations. The Greek government have assured that they are not aware of such a proposal. As Paris and Berlin have asked Athens and its creditors to speed up negotiations, François Hollande and Angela Merkel will meet with Alexis Tsipras outside of the Riga summit that begins today. On Saturday, at a conference for The Economist magazine in Athens, the Greek Prime Minister insisted on the need to no longer depend on foreign finance for the repayments of a non-viable debt.

Four months after Syriza came into power, the political battle is governed by time. Of course, those guarding the austerity program bet that popular support for the Greek government will crumble. But they also hope that the pressure will shatter the left, to give way to a less stubborn alliance between the “moderate” Syriza and the pro-memorandum To Potami and Pasok. The leader of the party will do the opposite of what the grassroots are betting outside of Greece. Yesterday, the Secretary General of Syriza, Tassos Koronakis, launched a sincere plea for the support of “all social forces and progressive and democratic politicians to recognise that the fight of Greece is a fight for democracy and social justice in Europe”.